April 22, 2014
Millennials go window-shopping
Millennials love to shop and they use every channel available to them to do so. They enjoy shopping so much, new research shows, that they are continually engaged in the activity. There’s just one rub: much of the time spent shopping doesn’t result in actual sales.
According to new research from The Intelligence Group (TIG), 36 percent of Millennials surveyed, only buy items they view as necessary. Jamie Gutfreund, chief strategy officer for TIG, described these younger consumers as being "in transition" and "more careful about spending money" in an interview with Women’s Wear Daily.
The TIG research also showed that Millennials are not always interested in ownership, with 35 percent willing to pay for access to a product when they need it rather than buying it outright. The report described this group as "NOwners."
While numerous research studies and media reports point to the spending power of Millennials now and in the future, there remain numerous financial challenges in front of this generation. Many analysts wonder how many of these consumers will move from window-shopping to the real deal.
A report on The Guardian website takes issue with a HSBC report that forecasted a target demographic for luxury goods. This group known as Young Urban Males or Yummies is expected to spend big on designer products. Apparently, these consumers will have landed jobs that allow them to pay off college loans that run $1000 or more a month.
The Guardian article asks, "How are we supposed to afford Prada when we can’t even afford our own bachelor pads?" It also pointed to research showing Americans between the ages of 29 and 37 have accumulated less wealth than people in the same group a generation earlier.
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Recent Discussions
Discussion Questions
How will restrained spending by Millennials affect retailing practices over the next 10 years and beyond? Do you think Millennials will eventually match or exceed the affluence of the generations that came before them?
Poll
I foresee a day when wedding rings are available for rent.
Millennials do not have the means to buy what they want which is why they are so important to the thrift store. Windows are important as they give those Millennial shoppers the ability to snap pics and share what they like.
Many retailers are so focused on Millennials’ interest, rather than the reality of their purchases, that they miss the Boomers with money and desire to own.
The title led me to believe the article was going elsewhere. Working with AOL and InsightsNow, I did research that was published as a blog called “buying at speed” where we found that at least 25% browse shopping sites without shopping purpose, including millennials, yet it has a big impact on shopping by INCREASING the degree to which they know what brand they will buy before they shop. I don’t believe we saw any indication that Millennials buy less (other than finances would allow), but we did see indication that digital makes them more brand-driven, not less.
Millennials are the topic du jour for retailers (and many other industries) since they represent the future demographic bulge for years to come, as well as for having their own set of expectations on any and everything. Today’s topic brings out the reality that Millennials are saddled with higher debt than previous generations and are finding it more difficult to find a job. So, what that means over the long term is that consumer frugality that came out of the Great Recession will not go away; high-end luxury goods brands will compete for a shrinking market segment; lifestyle, authenticity, and convenience elements will become more important in purchase decisions.
And this is happening at the same time as more Boomers than ever in California are moving back with their aging parents! Yet, I think the negative impact on luxury end will be manifested in slower growth and more competition, the real opportunity will be for retailers hitting on the values of the Millennial generation while still delivering a unique personal experience (“mass is dead”).
This quote from the Guardian captures the Millennials’ sentiment well: “ultimately, we value integration more than accumulation, and make our investments in lifestyle rather than proving a point with flashy luxury brands.”
Lastly, will Millennials eventually match or exceed previous generations’ affluence? Probably not. It just isn’t a high priority for this group overall. They’re changing the “KPI.”
There’s a lot of moving parts to this conversation. Half of the Millennials are just starting families, buying homes, and editing their spending accordingly. The recession has had a big impact on this group, finding jobs that support their tastes which often leave them on the outside window shopping. Internet access, and all that implies, gives them a nonstop opportunity to browse and create wish lists without spending a dime.
The other half are teens mall crawling online. Before the internet the typical teen spent as many idle hours as possible at the mall; window shopping and trying on clothes without purchasing much. Enter the internet and online mall crawling is a 24/7 365 pastime! I was at the Houston Galleria last weekend and a teen blogger had half of the mall closed to shoppers because of the crowd of teenage girls waiting for an autograph!
Do I think Millennials will eventually match or exceed the affluence of previous generations? That depends on their ingenuity in dealing with the economic headwinds they face. However, I believe their sheer numbers will put their spending well ahead of previous generations.
Sure, Millennials have financial constraints. Who doesn’t these days? What’s different is that Millennials have exhibited a greater tendency to be brand and channel agnostic than their predecessors. This will play out in a greater proportion of the generation trading up, renting or pooling resources to obtain desired items and trading down (or bypassing completely) less important, less ego-intensive goods.
Today’s younger shoppers have a NEED TO KNOW about the latest and greatest. Which drives a lot of shopping/research to be “in the know” vs actual purchasing. I believe some of the spending priorities are significantly different…tech is a priority, multiple devices that require upgrades and sometime service plans. They seem to willing to make trade-offs on more traditional purchases for the latest in tech, be it tablets, phones, TVs, etc….
Millennials simply will not be able to reach the affluence/financial comfort of their parents and older siblings, and at their young ages many of them have already come to grips with that. Right now they are struggling just to get out of the house and to be on their own. It’s very, very hard on them with the job market stagnant, college loans to pay off, and especially with food inflation now creeping in. They will spend money on technology and on their pets and try to stay frugally fashionable with respect to clothing and shoes. But as others here have said, the drive to conspicuous acquisition and the label consciousness of earlier generations is mostly over.
At some point they’ll inherit from their parents and grandparents (assuming they have anything left to give) but that’s a long, long time for merchants to wait for the millennial generation to “come through” in the way they had been hoping as they salivated in wait for this huge generation to grow up and spend.
First, not all Millennials spend money the same way. Second, conspicuous consumption is not the highest priority for many. Third, given how different Millennials are from Gen X at the same age, predicting future behavior is risky. While Millennials may have the same level of affluence in the future, their spending behavior is likely to be quite different. Research efforts should be more focused on understanding the consumers in this group – their segments, their beliefs, their behavior – than trying to see how they are like other groups.
I agree with Bob Phibbs on renting wedding rings, but question his future timing. From our divorce rates (and births out of wedlock) we have been renting wedding rings for many years.
The “restrained spending” of Millennials will affect retailing practices over the next 10 years as retailers will react accordingly — and downward.
Millennials will not match the affluence of generations that came before them. Like our country, many are too deep in debt and one day they will become aware that they are associated with who pays for our insatiable government spending and soaring debt.
Still, Millennials will continue to seek mostly prime time exhilarations even as job creation will not keep pace with growth in entitlements and government practices. That would produce result in less discretionary incomes than earlier generations.
May a massive miracle occur that proves me wrong.
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I foresee a day when wedding rings are available for rent.
Millennials do not have the means to buy what they want which is why they are so important to the thrift store. Windows are important as they give those Millennial shoppers the ability to snap pics and share what they like.
Many retailers are so focused on Millennials’ interest, rather than the reality of their purchases, that they miss the Boomers with money and desire to own.
The title led me to believe the article was going elsewhere. Working with AOL and InsightsNow, I did research that was published as a blog called “buying at speed” where we found that at least 25% browse shopping sites without shopping purpose, including millennials, yet it has a big impact on shopping by INCREASING the degree to which they know what brand they will buy before they shop. I don’t believe we saw any indication that Millennials buy less (other than finances would allow), but we did see indication that digital makes them more brand-driven, not less.
Millennials are the topic du jour for retailers (and many other industries) since they represent the future demographic bulge for years to come, as well as for having their own set of expectations on any and everything. Today’s topic brings out the reality that Millennials are saddled with higher debt than previous generations and are finding it more difficult to find a job. So, what that means over the long term is that consumer frugality that came out of the Great Recession will not go away; high-end luxury goods brands will compete for a shrinking market segment; lifestyle, authenticity, and convenience elements will become more important in purchase decisions.
And this is happening at the same time as more Boomers than ever in California are moving back with their aging parents! Yet, I think the negative impact on luxury end will be manifested in slower growth and more competition, the real opportunity will be for retailers hitting on the values of the Millennial generation while still delivering a unique personal experience (“mass is dead”).
This quote from the Guardian captures the Millennials’ sentiment well: “ultimately, we value integration more than accumulation, and make our investments in lifestyle rather than proving a point with flashy luxury brands.”
Lastly, will Millennials eventually match or exceed previous generations’ affluence? Probably not. It just isn’t a high priority for this group overall. They’re changing the “KPI.”
There’s a lot of moving parts to this conversation. Half of the Millennials are just starting families, buying homes, and editing their spending accordingly. The recession has had a big impact on this group, finding jobs that support their tastes which often leave them on the outside window shopping. Internet access, and all that implies, gives them a nonstop opportunity to browse and create wish lists without spending a dime.
The other half are teens mall crawling online. Before the internet the typical teen spent as many idle hours as possible at the mall; window shopping and trying on clothes without purchasing much. Enter the internet and online mall crawling is a 24/7 365 pastime! I was at the Houston Galleria last weekend and a teen blogger had half of the mall closed to shoppers because of the crowd of teenage girls waiting for an autograph!
Do I think Millennials will eventually match or exceed the affluence of previous generations? That depends on their ingenuity in dealing with the economic headwinds they face. However, I believe their sheer numbers will put their spending well ahead of previous generations.
Sure, Millennials have financial constraints. Who doesn’t these days? What’s different is that Millennials have exhibited a greater tendency to be brand and channel agnostic than their predecessors. This will play out in a greater proportion of the generation trading up, renting or pooling resources to obtain desired items and trading down (or bypassing completely) less important, less ego-intensive goods.
Today’s younger shoppers have a NEED TO KNOW about the latest and greatest. Which drives a lot of shopping/research to be “in the know” vs actual purchasing. I believe some of the spending priorities are significantly different…tech is a priority, multiple devices that require upgrades and sometime service plans. They seem to willing to make trade-offs on more traditional purchases for the latest in tech, be it tablets, phones, TVs, etc….
Millennials simply will not be able to reach the affluence/financial comfort of their parents and older siblings, and at their young ages many of them have already come to grips with that. Right now they are struggling just to get out of the house and to be on their own. It’s very, very hard on them with the job market stagnant, college loans to pay off, and especially with food inflation now creeping in. They will spend money on technology and on their pets and try to stay frugally fashionable with respect to clothing and shoes. But as others here have said, the drive to conspicuous acquisition and the label consciousness of earlier generations is mostly over.
At some point they’ll inherit from their parents and grandparents (assuming they have anything left to give) but that’s a long, long time for merchants to wait for the millennial generation to “come through” in the way they had been hoping as they salivated in wait for this huge generation to grow up and spend.
First, not all Millennials spend money the same way. Second, conspicuous consumption is not the highest priority for many. Third, given how different Millennials are from Gen X at the same age, predicting future behavior is risky. While Millennials may have the same level of affluence in the future, their spending behavior is likely to be quite different. Research efforts should be more focused on understanding the consumers in this group – their segments, their beliefs, their behavior – than trying to see how they are like other groups.
I agree with Bob Phibbs on renting wedding rings, but question his future timing. From our divorce rates (and births out of wedlock) we have been renting wedding rings for many years.
The “restrained spending” of Millennials will affect retailing practices over the next 10 years as retailers will react accordingly — and downward.
Millennials will not match the affluence of generations that came before them. Like our country, many are too deep in debt and one day they will become aware that they are associated with who pays for our insatiable government spending and soaring debt.
Still, Millennials will continue to seek mostly prime time exhilarations even as job creation will not keep pace with growth in entitlements and government practices. That would produce result in less discretionary incomes than earlier generations.
May a massive miracle occur that proves me wrong.